The shortage of materials and components as a production-limiting and price-increasing factor

Soňa Benecká

A chapter in CNB Global Economic Outlook - August 2021, 2021, pp 13-20 from Czech National Bank, Research and Statistics Department

Abstract: The global coronavirus pandemic has caused large cracks in international trade, logistics and production chains, which have now started to be felt fully in industrial producer prices. The European Commission's survey data confirm that the main motive for higher selling price expectations are barriers to production, mainly a shortage of materials and components. But historical experience shows that price expectations are corrected relatively quickly after the issues with the shortage of materials and inputs abate, and temporary supply shortfalls thus have a small effect on the long-term evolution of prices in industrial sectors. Nevertheless, corporations and consumers will feel the impacts of the pandemic on inflation for many months to come. The article follows up on the analysis in Box 1 of the Monetary Policy Report - Summer 2021.

Date: 2021
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